The present invention relates generally to the field of systems for and methods of processing purchase orders. More particularly, the present invention relates to systems for and methods of budgeting for purchase orders by allocating to order periods for the purchase orders.
One particular business that processes purchase orders is the retail business. Operations for a business often include purchasing merchandise from a supplier for sale to customers or for use in the processes and products for the business. Generally, purchasing merchandise or supplies from the supplier involves sending a purchase order to the supplier requesting a specific number of items for a specific price. The number of items multiplied by the price of the items provides a total cost associated with the purchase order. Prior to sending the purchase order, the purchase order may need to be approved by an entity, such as a budgeting department. The entity may apply one or more rules, or checks, to the purchase order in determining whether to approve the purchase order. For example, a rule may dictate that the approval is granted or denied based on whether incurring the total cost of the purchase order is acceptable in view of budget constraints. Accordingly, the purchase order is approved or rejected based on budget constraints prior to being sent to the supplier.
A critical aspect of the ordering process is to minimize the adverse affect of binding or tying up of company cash flow by ordering too much inventory too early. In retail selling, budgets are typically determined for each set of delivery periods. Although the budgets may be allocated for each delivery period, such as a quarter or a month, delivery lead times can require that purchase orders be placed in advance of required delivery period. A typical purchase order may include several products, each having a different lead time. Although the purchase order can be placed early enough to satisfy all lead times, this can result in unfortunate substantial burden to the business by binding (tying up) unnecessary amounts of business capital or cash flow by committing funds committed to purchase orders earlier than needed. This is accomplished by the important act of splitting and allocating purchase orders to order periods in time consistent with delivery periods. More details of this important contribution are discussed in the detailed description of the preferred embodiments section of this patent application. The inventor is unaware of any previous purchase order system that could accomplish detailed purchase order splitting and allocating flexibly, automatically and over a large array of products, budgets, order periods and delivery periods. This is not surprising as the situation in one department store situation revealed more than 40,000 individual order period-delivery combinations.
The retail business can require that certain purchase orders be processed in a very short amount of time, while other purchase orders must be placed well in advance of the desired delivery. For example, changes in current trends in the fashion industry may require that inventory be increased on short notice. For certain aspects of the fashion industry, items may be required to be ordered one or more seasons in advance. An advantageous purchase order system must accommodate this variation in lead times of the ordered items without unnecessarily tying up funds.